Scam victim sues bank

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Posted: Sun Feb 01, 2009 12:38 pm

A Houston lawyer is suing Citibank after being taken for $182,500 by email scammers claiming to be a debt-chasing Japanese company, Texas Lawyer reports.

Howell is seeking "$182,500 in actual damages for Citibank's alleged negligence" plus "a minimum of $367,000 in punitive damages".

Citibank has denied the allegations and wants a "take-nothing judgment". The bank's attorney, Yasmin Atasi, insisted: "We are not liable for those funds."

http://www.theregister.co.uk/2009/01/30/texas_lawyer_scammed/

And more details here: http://www.law.com/jsp/article.jsp?id=1202427717175

What do 'eater members think?

Posted: Sun Feb 01, 2009 1:34 pm

Quote:

and advised the firm that one of its customers had agreed to make a partial payment of the amount outstanding.

On Oct. 7, 2008, the firm alleges, it received a "Citibank Official Check" for $367,000,
in allowing a wire transfer of $182,500

That's a very high commission for doing virtually nothing, Although he'd have lost more if he'd accepted a lower percentage.
I'm not a lawyer, but I dn't think he's a chance.

Posted: Sun Feb 01, 2009 2:15 pm

Quote:

He says the HPD declined to investigate because it involved multiple jurisdictions, and the Secret Service was not interested in investigating his firm's loss, because the amount was too small.

$182,500 may be too small for the Secret Service, but if the lads get 10 of those a year, they're doing considerably better than I am.

It's really annoying that the SS doesn't look at the overall picture, or maybe they do, and just decide it's all too much bother

Elite Baiter Joined: 19 Jan 2008 Posts: 1043

I bloody hate lawyers like this. I really hope the judge actually slaps him in the face. If s/he can't do that, then I hope he gets thrown out and maybe gets disbarred for douchbaggery.

He just doesn't want to take responsibility for his actions. I wouldn't say he's a fool for falling for it, but rather a fool for everything else he seems to stand for.
Do you think this is part of the big cheque scam ring we've been seeing on ScamWarners?

Posted: Sun Feb 01, 2009 7:11 pm

From a UK perspective, it would all come down to the exact wording the junior clerk used when informing the lawyer about the fate of the cheque.

In the UK, if the clerk just said it was cleared, then the bank would likely be found to have been negligent.

UK and US law are similar, but I don't know if this judgement would come out the same. As most banks record calls it's not going to be hard for a court to reach a judgement.

Without doubt the lawyer was, as he admitted, a dumbass, but a bank is also deemed to be a body whose advice and guidance can be taken as reliable, so a straight 'it's cleared' would be treated as something a customer could rely on. To protect themselves the bank should include some form of caveat warning of the potential outcomes.

UK and US law are not the same - but this could be a case where both parties are at fault. A lawyer should have some knowledge of the clearing cycle - so US law is likely to reduce any award if he did win.

Just my own thoughts.

Posted: Sun Feb 01, 2009 7:14 pm

It's very doubtful that a judge would find in favour of him.
If he did, it would open the floodgates for compensation claims. There's really nothing of any difference in this case with any other cheque scam.

I would be very, very suprised if he gets a single cent back.

Baiting Guru Joined: 03 May 2007 Posts: 18313

I'm not familiar with UK banks, but know that US banks do have it in writing that you are responsible for all checks to your account, even if the money has been made available to you. I see no negligence on the part of the bank if that is in place.

Gomer: I don't particularly care for any victim being called a dumbass, even if he has previously said so himself. Some of these scammers targeting lawyers are quite convincing and smart, as we've seen on the thread at ScamWarners.

Posted: Mon Feb 02, 2009 1:59 am

I can't apologise for an insult a person levels at himself.

Posted: Mon Feb 02, 2009 12:51 pm

UK law changed in November 2007. See here

Quote:

If the cheque hasn't bounced and been debited to your account by the end of the sixth working day, the bank or building society will not be able to debit it to your account unless you give your permission or unless you are a knowing party to a fraud.

I suspect that a bank would challenge this on the grounds that a lawyer was negligent.
I'm with GP here. "Cleared" only means that there were funds in the account to meet the check, and that the amount had been credited. Not that the check was genuine. If a lawyer doesn't understand this, who does?

Posted: Mon Feb 02, 2009 3:34 pm

I'm torn. Yes, it seems like the lawyer should have known better and had better resources for educating himself than the average mark, but he did at least believe he was performing a service for a client that wasn't far outside the norm for him. And I have to point out, very much to his credit, he admits he made a mistake, and more shockingly, covered the loss out of his own pocket. That's some refreshing integrity that you don't often see these days when most people would be whining it's the firm's responsibility.

The way I understand the terms in the U.S. banking system, "fully cleared" actually means the check has been fully vetted and the money is legally yours, no backsies. Making the money available to your account does not mean the money is yours, yet, and many banks/tellers have a nasty habit of using the term "cleared" when what they really mean is "the money has been made available to your account pending full clearance". This confuses customers and the banks don't do anything to clear up that confusion unless it's to their advantage. The terms aren't interchangeable, but your average banking customer thinks they are.

Law firm account or not, I wonder why wasn't a temporary hold placed on a check that large? My bank puts a hold on anything over $10,000 and won't credit it to my account for several business days. They even did that with a cashier's check that was cut by a bank immediately across the street...

Anyway, I think it will all come down to the language they used, too, and what, if anything, was in writing. If the lawyer has something in writing stating the check fully cleared... the bank is probably going to have to eat the cost. If he doesn't, the bank seems to win every time. If the bank essentially lied or misled them into believing the check had been fully cleared, they should eat the cost of the check but not have to pay any punitive damages. Court costs, perhaps, but not punitive damages.

Much as I would like to see a few court cases like this force some sort of reform in check clearance, I doubt this one is going to come out in favor of anyone but the bank. Doesn't sound like they took any special precautions and the bank certainly won't admit a mistake if they made one.

Posted: Mon Feb 02, 2009 4:43 pm

a few common questions answered regarding fund availability in US banks.

http://www.helpwithmybank.gov/faqs/banking_funds_available.html#drop08

I am not an attorney, but I do have a few i call friends. we have discussed similar suits in the past and it was explained to me as such; cases like this often times never see the inside of a courtroom. in many situations, these cases are settled for pennies on the dollar with gag order stipulations put in place.

someone files files a suit for $200,000.00, instead of fighting, the defendant company settles for $50,000.00. it's cheaper than paying a team of attorneys to defend the companies reputation, investigate the claim, defend the claim, advertising & marketing to rebuild the reputation, etc.

often times, it's cheaper to pay than to fight.

Posted: Mon Feb 02, 2009 4:50 pm

Most banks (in my small experience) are pretty clear about the terms of check clearing, specifically about the funds being made available even though they are not necessarily cleared. I know that there does seem to be some vagueness to it though. Perhaps it should be a bit more advertised.

I am going to have to lean to the side of the bank in this instance.

Baiting Guru Joined: 03 Mar 2006 Posts: 7103 Location: Yes

I actually defended a bank in a similar case (for less money). In the U.S., nothing the clerk says will override your written account agreement. Moreover, checks are never "fully cleared" -- they just haven't been rejected yet. Wink

There are rules on how and when checks can be denied intra-bank, but the point is that the checking system is really only present for convenience. As between you, your bank, and the person who wrote the check, the bank is in the worst position as to whether the check is "good".

Think about it, the bank merely processes a piece of paper promising to pay you a sum of money. The bank knows nothing that isn't displayed on the face of the check. Moreover, it's illegal for the bank to pry any deeper than that. Why blame the bank when you're the one who decided to cash it, not knowing the legitimacy of the person who wrote it?

Anyway, I was successful in defending the bank based on the (a) the above rationale, (b) some technical issues, and (c) the fact that these types of scams aren't exactly unknown these days.

Elite Baiter Joined: 16 Jul 2008 Posts: 1407

It appears that JM is a Barrister. Did you happen to use any phrases such as
"I am writing today in a most urgent manner"
"I eagerly await your positive response"
"Please forward the appropriate documents including a nose print"